Most of you probably realize that anyone can call themselves a financial planner: brokers, insurance agents, the free lunch seminar dude. But you might not have taken that a step further and thought about what that really means. It means that financial planning is not a regulated profession. Crazy, huh?
Although financial planning is not regulated as a profession, most of the specific activities, for example, investment advice (SEC or state securities department) and insurance advice (NAIC or state insurance department), are regulated. For example, my financial planning business is registered with the Office of the Securities Commissioner in the State of Kansas as a Registered Investment Adviser firm. The key words here are “investment adviser”. The State of Kansas is most concerned with the investment advice I give, not the other financial planning advice I give. Investments are certainly a big part of financial planning, but I would argue there are many other areas of financial planning that are even more important than investments.
What this means to me:
This is perhaps a bit bold, but I consider myself a real financial planner. I am a CFP® practitioner. I follow the 6-step financial planning
process. I introduce myself as an hourly financial planner or an hourly CFP® to differentiate myself. I am a fiduciary (click here to see my past musing on the “F” word).
What this means to you:
Until financial planning is a regulated profession, you have to do a little homework to make sure the person you’re working with is a
professional. I’m a bit biased, of course, but I think you should look for the CFP® marks. I think you should know how a planner gets paid and how much they get paid for the advice (and/or products) they’re recommending. I think you should absolutely work with a fiduciary.
Here's to self regulating!